Question

Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $880. Selected data for the company's operations last year follow: 280 255 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative 105 315 35 40 $ 63,000 $ 32,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold Gross margin Selling and administrative expense Net operating income $ 224,400 173, 400 51,000 42,200 $ 8,800

Answer 1

CD $ 5,625 Fixed manufacturing overhead cost included in inventory Calculation: fixed manufacturing overhead cost included in inventory = (Units in ending inventory x Fixed manufacturing overhead per unit) Firstly, we will calculate fixed manufacturing overhead per unit fixed manufacturing overhead per unit = (Fixed manufacturing, overhead & Units Produced) = $ 63,000 280 - $ 225 per unit fixed manufacturing overhead cost included in inventory = 25 units X $ 225 per unit = $ 5,625

Ida Sidha Karya Company Variable Costing Income Statement Sales $ 224,400 Less & Variable expenses: Variable cost of goods sold $ 16,025 Variable selling and administrative expense & 10, 200 $ 126,225 $ 98,175 Contribution margin Less: fixed expenses fixed manufacturing overhead Fixed selling and administrative expense $ 63,000 $ 32,00D $ 95,000 $ 3,175 Net operating income Calculation: Variable cost of goods sold = (Unit sold x Variable cost per - unit) Variable cost per unit - Dineet materials + Direct labor + Variable manufactwüngoverhead - $105 & $315 & $35 - $ 455 Variable cost of goods sold = 255 * $ 455 = $ 116,025 Variable selling and administrative expenses = (Units sold x Variable selling and administrative) = 255 units X $40 = $ 10,200